Pre-Budget Report Round-up - Fears over goodwill.
Businesses could become more expensive to buy after changes to
Businesses risk becoming more expensive to acquire as a result of Gordon Brown’s indication in the pre-Budget statement that goodwill will be subject to tax relief. The government has been consulting on allowing intellectual property to be tax deductible on purchase, but had also put forward the more radical proposal of making goodwill tax deductible. This is a measure which experts believe would ‘change the face of all thinking about tax when it comes to acquisition and structuring of purchases’. But while selling goodwill will be tax deductible, buying it will become a taxable gain, the end result of which, according to Richard Baron, deputy head of the Institute of Director’s policy unit, will be higher purchase prices. He said: ‘It’s a bold decision and probably the right one. It would have been a lot easier if you leave goodwill out of the proposal.’ A technical note has been issued by the Revenue. Double tax and capital gains changes, page 6 More pre-Budget stories www.accountancyage.com/Tax/1113087.